Why is US $ getting so high or Polish zloty falling?

So, you said:
delphiandomine et. al.
It's not a bad idea to have it available just in case - certainly, makes more sense than needing it and not having it available.

Ok... Well if you can't afford it , then IT IS a BAD idea. Ever heard this addage: "No deal is a good deal if you don't have the money" ??

How could we be paying a foreign government for a 40 million dollar insurance policy when we could be paying OURSELVES that money by getting rid of that tax burden? Just think about how far that would go here in Poland. You wanna talk about "RECOVERY" like you've never seen?? Direct that money right here into the economy. Then, if people save, invest, or blow it all, we're still MUCH better off than sending it to a far away land, much less the IMF. THe same IMF that held Argentina's hand and walked their economy off the cliff. Yeah, that IMF.

Insurance Shminsurance....... as I asked before - against WHAT? I know I could take out a 20 million life insurance policy, but WHY? If I had that much net worth it would make sense. But if I couldn't afford it, then I'd be setting myself up for financial ruin.

It's either one way of the other. Either Poland really is doing ok and everything is fine or it isn't. Which will it be gents? I agree affordable insurance is prudent, but as I mentioned with such a HEFTY price tag, it's approaching ludicrous. Let's put it into perspective.... The entire DEFICIT of Poland in 2010 (as I read) was only about 10 bln Euros. So why pay 40 billion dollars to protect +/- 10? Does that sound reasonable?

Here's another one to frame my argument: In 2011, Poland's spending budget is supposed to be about 313 Billion zloty (around 105 Billion dollars). The USA/IMF credit line is costing 40 million dollars or roughly 120 million zloty. This doesn't seem right, does it? Now do you see where I'm coming from?? Who still thinks it's a great value and a great idea at that price? I could pay off the entire deficit in one year by canceling the IMF credit line. We all know that being OUT of debt is MUCH cheaper and better off than the inverse. So, if I'm wrong, what's going on over at the finance ministry? Surely they can see the same numbers as I.

But Poland can afford it. It's budgeted for and there's no issue with paying it.


40 million dollars wouldn't go far - what, 1zl per person? Pretty worthless in the grand scheme of things, don't you think?


It wouldn't go far. The renovation of one roundabout in Poznan will cost around 60 million dollars. One roundabout.


And then an unexpected crisis happens and there's no money to pay the bills. Woohoo - that'll go down well in socialist Poland.


Yes, we're so much better off when the crisis comes and...there's no overdraft. Is the concept of an overdraft really that alien to you?


Who said Poland couldn't afford it?


You do realise that in Europe, we count billions differently?


See above. The deficit is most certainly not only 40 million dollars.

You need to look at your maths :)

But hey - I'll help you -


So - the deficit is actually around 9 billion Euro. Or around 10 billion dollars. 40 million dollars is..well...

Thanks for the reply. So let's take these one by one:

Who can predict the future? Well the finance ministry and economists seem to be all too eager to polish up their crystal balls for the media, so maybe ask them?

In the meantime, I'm not saying all insurance is bad. I'm saying AFFORDABLE insurance is good. EXPENSIVE insurance is not a good idea for a country trying to make budget cuts and get the GDP-to-Debt ratio back to the ERM2 standards. THat's what got us on the topic to begin with - currencies.... and Poland trying supposedly to get to the Euro zone.

I find most of what politicians are claiming publicly about finance and the Euro adoption to be disingenuous.

insurance scum bags, i hate insurance.

Maybe from your American point of view, yes. But Poland is socialist, has voted socialist for years and true economic right-wingers are very much on the fringe of politics. People just don't see it the same way here, rightfully or wrongly.


But people here *want* to rely on the government. They're used to it, and it's why the big parties are either ex-Solidarność or ex-PRL. I also don't think it's a good idea to preach to them about what's best for their own country....


It's semi-public. By that, I mean that the city of Wroclaw owns the shares, but the zoo is a limited company. But - uh - again - you're mixing up your numbers. The deficit is around 9 billion Euro - 35 million Euro is a tiny part of that.


It's justified when the majority of people in Poland are socialists who want the services to keep on functioning when there's a crisis. People here are simply not willing to accept slashed public salaries/cut pensions.


40 million zloty really is peanuts. It's what, 1zl for everyone in the country? They could simply cut the financial settlements to the provinces by 3 million each and the job would be done - and there wouldn't be much difference on the local level. A couple of new roads might not get built, that's about it.

Ok, I see the point about the "insurance" aspect, I just disagree. It's not the government's job to bail out bankers or private investors that made bad choices. LEt the free market sort those guys out. Anyhow, bailouts create something that's called "MORAL HAZZARD". I'm sure you're familiar with that term.

As for the numbers, you're correct. I checked dlugpubliczny.org.pl/pl and it is more like a deficit of 790 Billion if I read it correctly. So, it would take longer to pay off, but hey 40 million dollars is a good start!

...and the argument of 1 zloty per person, well that would be per taxpayer, and since there are supposedly about 38 million Poles and some percent working and paying taxes (I have no idea at the moment what that is), but let's say for discussion sake it's 55%... then you've given every taxpayer about 2 zloty. Then we have to add in the reduced government bureaucracy, and the salary of the guys no longer needed to collect the money, and the "economists" they hired, and the office space, and insurance/health benefits and so on, and so on.... So that 2 zloty becomes probably quite a bit more. But even if it is only 2 zloty per tax payer - it's their money. After all, it's supposed to be a Republic here, and I don't recall any referendum on a bailout of any kind..... so the government is then demanding something which it does not have? Doesn't sound very much like a Republic to me....

Anyhow, it's all about understanding capital and what happens with mal-investment. Bankruptcy or liquidation or sale is the natural correction a free market provides to bad investments. Let's say I decide today to start a musical band and tour Poland. I'd buy or rent a bus, musical gear, audio gear, and so on.... If that band goes broke form lack of ticket and CD sales, I need to sell off the company or any assets of value to repay my debts. It's called bankruptcy. It's not fun, but it's there to take care of mal-investment. It also serves as a waring to the rest of us entrepreneurs of what MIGHT be waiting for our companies or investments if we make the wrong choices or take on too much risk. It's that fear that makes us use money wisely. You hear now of banks being RISK-ADVERSE.

If we take away this risk and give money away at record-low rates, we encourage the bad investments. Doesn't anyone recall the American housing crisis? Too many people took adjustable rate loans. Once those loans adjusted up, many could no longer afford the payments and defaulted. There IS NO BAILOUT for individuals. Even if the government has the money from the IMF, what the hell makes you think they're going to give it to YOU or ME in a real crisis situation? Do you REALLY believe they're going to show up at your office with cash to help you if/when the economy tanks? Are you living in a fantasy? Can you show me in history when this ever worked?

History shows this money rarely if ever goes to private companies, instead it finds it's way into the banks and mega corps which make up a SMALL percentage of the total real economy. I read recently that in Poland like many places, small business makes up about 95% or so of the market. What are we doing to help small companies? Show me the plan for helping small business. You can't. It doesn't exist. Government doesn't give a fair deal to anything but big corps that are able to make big deals and trade favors. It's call crony capitalism.

Gold's value is perception also.


There were lots of reasons for Rome's decline. One should read Gibbons on the fall of the Roman Empire. It's quite voluminous.

The fact is there isn't enough gold to go around to support currencies. The current economic crisis has been created by the major banks and elites who wish to politically control the world through finance.

Thanks again for the interesting discussion..... I'll comment below each item.

Does it matter what nationality I am? I live in Poland and pay taxes here. At what point am I "good enough" or "qualified" to comment? After 10 years paying into the decrepit system? What's the minimum criteria? Again, it's a Republic.... so Elvis has left the building, and socialism is on the way out....


Own country? Where are you from? Do you live in Poland? Is everyone in such a high ivory tower that we can't ask questions and comment? Anyhow, who's telling who how to run things? I'm speaking from the point of view of liberty and history. Empirical evidence proves my previous statements correct. If we want examples, we don't have to look further than Greece or Ireland..... BUT we could continue across the pond to the USA where it's quite possible they might go "tits up" because they over-extended themselves. So how long should we wait before sounding the alarm about BAD economic decisions?


Ok, let me clarify are you labeling a majority of Poles as socialists? I agree that there are undoubtedly socialists still here in Poland, but I believe they are a dying and shrinking minority.

To that point, let's take a look at the young generation. More educated than ever before, and yet unable to find a job in their fields. It's a HUGE problem. I encourage you to talk to a recent graduate. I know a young man in his late twenties that just graduated SGH and all his classmates are JEALOUS that he found an internship making a measly 1000 zloty to the hand monthly. They've all been looking for work for about 8 months - some for 2 years!! Hoe long do you think an educated economist, doctor, or nurse is going to wait to get a job?? It's a key question. If young people don't believe they will get a fair shake, they will either leave or fight. In psychology it's called FIGHT or FLIGHT. It's a human reaction. We already have seen the FIGHT aspect in Northern Africa and some in the Arabic countries. We've seen a small bit of that in the UK. Don't you recall what happened jsut a few weeks ago?? We're about to see it in the USA, too but I don't know if it will be a fight there or not - it depends on the elections in 2012.

So, my question: Do you think young people will sit idly by while they get screwed out of their money, unable to save because the burden of previous generations is so enormous? Whatever "socialist" fantasies they were present will vanish as the tax burden becomes so great. Even Tusk even had to break his campaign promises not to raise taxes! He raised VAT to 23% (other VAT's raised as well) as well as excise taxes across the board on fuel, vehicles, cigarettes, alcohol, etc. etc.....

So when inflation is up, unemployment is up, social benefits are decreasing, and salaries are down, where do you think the chips will fall? I'd be shocked if we didn't see a protest or two in the next decade. I'd be further surprised if the young generation didn't overturn this "socialist" ways you referred to. Either that or start leaving in flocks. Oh, but wait lots of people did that already..... some came back, but lots didn't. Step one. We're waiting on step two. I know I'm not crazy because I was talking last week to the president of a large bank in Poland and he even echoed fears that young people could start protesting and doing the same things as seen in the UK or in Africa. What would you say if your bank's president said that? Would you take it seriously? Maybe it's time for people to start thinking about this.....


I see your point entirely. I guess I just don't agree there. I know in big corporations 40 million dollars can be called "peanuts", bit it is all relative. Poland is not the UK and not the USA. We don't hold the world's reserve currency and MOST external investors are not greatly concerned with Polish economy inasmuch that we can just continually print cash to monitize the debt..We can't run up a big or even mild deficits here because it WILL sink the country with no way out.

Everyone, we have to remember the state has NOTHING apart from what it can forcibly take from its citizens. So if I'm taking 40 million from Polish citizens, (or worse from other EU citizens), then the time will definitely come to pay the piper. THat 40 million would otherwise be saved or put to work in the economy. Failing to see this is a misunderstanding of how the free market works. When you take away capital (savings) from people no matter how much, it REDUCES the amount available to be used both for investments by companies and by consumers to purchase goods. Anything else is just robbery in disguise. "A fool and his money are soon parted." Let's NOT be fools with our money, even more so with other people's money.

Hi CP! Thanks for joining in the conversation.

Sure, lots of thing contributed to Rome's fall. But you have to admit the monetary policy was key. Don't take my word for it, read history. They over-extended themselves and started de-valuing their currency. It's not rocket science, rather it was a recipe for disaster. One that other countries are following. One that I hope Poland will avoid.

As for gold supply or production, maybe you know something everyone else doesn't? According to the world Gold production, gold output is around 2,000 tons annually. So to say "there's not enough" is not in the least bit true. Here's the chart: en.wikipedia.org/wiki/File:World_production_gold2.jpg

Unless somebody somewhere is able to wipe away about $80,000,000,000,000 in debt the global economy will get worse.

That's basically my point. It's insane. However, I can't really do anything about the other countries. I CAN do something to wake people up to these facts here in Poland. We all can.....

BTW - Try asking a politician about M3 (money supply) and see what kind of response you get. Just try it and see.....

Please quote your source, I think its in the range of 252,900,000,000 dollars.

Too many pub numbers being used on this thread but you are both right.

The deficit is about EUR 9bn - but this is the total per year mismatch between govt spend and income.

But the total public debt is much higher - you are correct it is circa USD 252 bn. In PLN its 790 bn. This is the accumulated overspend plus interest and the amount that has to be paid back at some point in the future, just like to Irish and the Brits and the Spanish need to. Make no mistake its a serious problem, its got worse under PO which really surprizes me and it need to be fixed soon - not all of the anti zloty sentiment is caused by Euro issues.

Just the debt service cost on that is circa EUR 10bn per annum.

Obviously the first step to getting the public debt down is to have no annual deficit.

Does it really cost 60m usd for a roundabout ? The whole 20km stretch that the Chinese were arguing about was only EUR 200m.

And by billion I mean of course 1000 million - I don't think anyone in Europe uses the million million version anymore except in France it once caused me some confusion.

Sorry Delphiomine, I do not believe that.
60 Millions of Dollars for the simple renovation of one roundabout in Poznan ? Come on what will it be made of ? Gold?

Debt does not have to be paid back, it is usually rolled over forever and inflated away. How serious a problem it is is a matter of debate. If its spent on infrastructure, then debt is good for a country like Poland with its poor infrastructure. If the economy is growing rapidly, then some debt can be managed. Poland is lucky that its level of debt is far less than many other countries and its economic growth is something the rest of the EU can only dream of.

Maybe there is some fear about Polands economy that contributed to the Zloty's fall, but I'd say 75% of the fall is safe havening against the worlds economic problems.

The difference in the USA, you just hand back your keys to the lender/bank and the problem then becomes theirs. So the USA set the trend on bubble economics, the rest of the world followed to some degree, the American investors have a way out, the Europeans depending on the country, they took mortgages out, are either stuck with an over valued asset or facing chapter 11.

It makes you think !!!!!

Can't individuals file for personal bankrucy in Europe ? Sure !

declaring personal bankruptcy in Poland is nigh on impossible - there is a law on this but the restrictions and financial cost of a court bankruptcy case are prohibitive

Chapter 11, depends on the country. That is one of the reasons many International companies operate out of the UK or Ireland.


If it was so easy to open to file for bankruptcy in PL as the UK, it would become a national sport and the Poles would win Gold medals at it.

BS, The Elites have you...hook, line and sinker. They want to keep you down and this is a way they do it, you owe money!


Very True


I did, I read Gibbons. Actually Rome fell due to slavery. It was a slave economy, everything else is symptomatic of this fact. The problem with America is not the debt. The problem is, it's becoming a slave economy.

During the past 2 weeks the price of gold per ounce, has dropped drastically from $1900 to $1770 per ounce.

Wow interesting. Just out of curiosity ,are there any Polish Gold Coins like you have pure Gold Swiss Francs or British Gold Coins?
And if so do Polish buy them?

There is no such thing as a $80,000,000,000,000 debt in the global economy. You're mixing up notions

Has Argentina ever repaid all of its debt ? I don't think so

Did poland pay its debt under communism.... I don't think so...I think most countries waived the debt.

But its them that are in debt so how do you work that out? did you not hear about the hundreds of billions the UK tax payer has to pay to bail out the banks form toxic debt? Same in the US.

Please provide examples of the elitists keeping us down (your words) when its actually their debts through risky high net investment banking that have actually caused this. Ever heard of the fractional reserve policy? Sub prime mortgages anyone??

You best keep quiet mate (Chicago Pollock) or youre going to wind up looking like a complete fool.

You do have a point with the elitists wanting to keep us (the ordinary people in debt) but you're barking up the wrong tree mate, big time.

PLN is falling not only to USD but to pretty much every single currency in the world.Nothing surprising after POlish prime minister aka Ryży złodziej told about effective nationalization of profits of Poland's best company KGHM causing small and bigger shareholders 42% losses on their investment.I will be very surprised if anybody invest a single USD in this crooked communist country.I sure won't ever again.If I did not live out of POland already I would move out immidiatelly because as investors are running out empty shelves in stores will follow and you better hurry up because EU is breaking down and soon western countries will close their borders for Poles again.When that happen I promise to send some oranges and maybe even a real coffee like in good ol 80's to those who can prove they didn't vote for Ryży złodziej and his clique.

Yawn. The Polish State is the biggest shareholder and is perfectly entitled to act in accordance with Poland's best interests.

KGHM's share price was artificially high due to the fact that the Government was taking dividends from the shareholding (instead of imposing taxes) - now that KGHM (and others) are being taxed fairly, the shares will be at a more realistic level.

As the Government said - it was senseless taking only a percentage of the dividends rather than taxing the entire output. It was effectively a transfer of cash to foreigners - which is why this measure was taken.


Nah, you'll stay in your village and rot while the rest of us get rich.

delphi Polish government paid big dividends out of KGHM for the last couple of years - but it had to share with other shareholders in the profits (I think private shareholders account to more than 40 per cent shares) - so the government came up with the idea to take most of the possible profits in the form of a tax - interestingly KGHM reacted in buying a mine (or a mining company) in the US or Canada (I don't know any details) - it's not a fair action btw - because KGHM received a lot of capital from the shares and it invested it - and now the state moves in to take most of the profits of that capital investment

btw - as PiS stated when the whole issue arose (in the exposee of Tusk) there should have been an investigation whether there was any bigger movement in selling the KGHM short on the Warsaw stock market in the weeks leading to the exposee which would have been a clear manipulation of the market

Foreigners who paid fair and square for their shares, on the open market.

Its not a positive move for Poland's image among investors as obviously people are now looking at what will be the next part state owned company to get a unilateral tax applied to it.

The govt cannot have it both ways - they wanted to float KGHM in order to generate cash in the 90s, partly in order to modernize its equipment and that entails obligations from their side to play fair.

5% or so would be fine. But 33% ?

I have been robbed too.One day I learned that even though I own part of KGHM I have no rights to its profits because state of Poland which only has 31% in the company (Poland sold 10% in early 2011 at 100PLN/share) decided overnight that it wants all the money.So I invested but Poland will profit?It's a robbery.Yeah,they got me this time but it won't happen anymore and as soon as USD drop a bit I will take my money elswhere.Good luck to Poland with "privatization",I will stay away as I have acces to other markets.One can already see weaknes of Polish market compared to others because nobody will buy something what tomorrow may be de facto nationalized.